ICICI Bank rating unchanged following tap bond offer: Moody’s

Moody’s Investors Service said ICICI Bank’s credit rating for an existing unsecured note remains unchanged at Baa2 following the announcement of a tap bond offering.

ICICI Bank has announced a $250 million tap bond offering, which has the same terms as the existing $750 million 4.7% 2018 senior unsecured notes. The unsecured notes were issued through the Dubai branch as part of $5 billion medium-term note programme.

The outlook on the ratings remains stable, Moody’s Investors Services said.

Tap bonds defined

Tap issue is a procedure that allows borrowers to sell bonds or other short-term debt instruments from past issues. Usually, the bonds are issued at their original face value, maturity and coupon rate. Such bonds are, however, sold at the current market price. Issue on tap is suited for smaller fund-raising attempts.

Moody’s has a standalone bank financial strength rating of D+ for ICICI Bank, mapping to a baseline credit assessment BCA of baa3 on the long-term scale.

“We believe that the probability of systemic support for ICICI Bank is very high, given its sizeable retail deposit franchise and its importance to the national payments system as India’s second largest commercial bank.

Therefore, the long-term local currency deposit and foreign currency senior unsecured debt ratings receive a one-notch rating uplift from its BCA”, the international rating agency said.

The foreign currency senior unsecured debt rating at Baa2 is at the same level as the foreign currency debt ceiling for India.

The bank’s foreign currency deposit ratings of Baa3/P-3 are constrained by the sovereign ceiling.

srivats.kr@thehindu.co.in

Read more »

SBI Life launches ‘smart income protect’ plan

SBI Life Insurance today launched a traditional savings plan that offers tax-free regular income at guaranteed rate of returns.

This regular income will be at a rate of 11 per cent of the sum assured or paid sum assured for the next 15 years, after maturity, the company said in a statement.

Catering to the risk-averse investors, ‘smart income protect’ offers life insurance cover, lumpsum benefit at maturity and regular guaranteed payouts for 15 years, after maturity, the statement said.

SBI Life’s smart income protect caters to future needs like post retirement or child’s future expenses through its attractive feature of guaranteed annual payouts.

Not only the policyholder receives a lumpsum bonus at maturity but also guaranteed payout for 15 years after the maturity. The lumpsum bonus, at maturity, comprises Vested Reversionary Bonuses and Terminal Bonus, if any.

In the event of a policyholder’s death, the sum assured is immediately payable to policyholders’ nominee or legal heir as a lumpsum, along with bonuses.

Beena.parmar@thehindu.co.in

Read more »

Oriental Bank raises Rs 1,025 cr tier-II capital

Oriental Bank of Commerce (OBC) has raised Rs 1,025 crore of capital through lower tier-II bonds to fund its business growth.

These bonds carry a coupon of 8.93 per cent a year and have tenure of 10 years.

Confirming the completion of the capital raising through the bond offering, V. Kannan, Executive Director, OBC, said this would help the bank conform to the Basel-III requirements. These bonds were rated AA+ by both CARE and ICRA.

The bank is looking at a capital adequacy ratio of over 12 per cent at end-March 2013. The Basel-III capital adequacy rules will kick-in on January 1 next year in India.

As of September 30 this year, OBC had a tier-I capital of 9.69 per cent. The overall capital adequacy ratio stood at 12.06 per cent (without including the profits of the first half).

Kannan did not rule out further tier-II bond issuance this fiscal. “In case there is a requirement, we will come out with another issue in December.”

The bank was looking to mop up Rs 1,000 crore through the recent bond offering. There was also a green-shoe option beyond the Rs 1,000 crore.

Including the green shoe option the bank has got Rs 1,025 crore through this issue. Kannan said.

As of end September 2012, OBC had headroom of Rs 5,157 crore of lower tier-II capital. Of this, the bank has now raised Rs 1,025 crore.

The OBC board had given authorisation for Rs 1,200 crore, implying that the bank could raise another Rs 175 crore without board approval.

srivats.kr@thehindu.co.in

Read more »

HDFC Bank: 87 rural branches opened in Punjab, Haryana

HDFC Bank on Sunday said it has opened as many 87 branches, mostly in rural areas of Punjab and Haryana in one single-day.

The country’s second largest private-sector bank also launched an exclusive ‘Bharat Credit Card’ for farmers in both the states.

Punjab Chief Minister Prakash Singh Badal inaugurated 51 branches in the state, while the 36 branches in Haryana were launched by Chief Minister Bhupinder Singh Hooda, the bank said in a statement.

The rural push is part of the bank’s board mandate to bring 10 million unbanked families into the banking fold.

“We are committed to providing efficient, technology driven banking products and services across the country to help bring about inclusive growth. These 87 full-service rural branches reiterate this commitment and we are confident our endeavour will help in the economic development of Punjab and Haryana villages,” said Navin Puri, the bank’s country head for branch banking.

Last Thursday, managing director and chief executive Aditya Puri called on Badal and assured every support in execution of all development related projects in the state, besides offering a composite package for upliftment of below poverty line families. The package included offering financing for self-employment ventures.

HDFC Bank is the largest credit card player in the country. Earlier this year, the bank had launched exclusive credit cards for doctors and teachers.

Read more »

Allow banks to buy back gold coins: SBI chief

Banks should be allowed to buy back the gold coins they sell to their individual customers, according to State Bank of India Chairman Pratip Chaudhuri.

Pointing out that there is good demand for gold coins, the SBI chief said permitting banks to buy back will create liquidity in the precious metal, thereby easing pressure on the import front.

The current RBI guidelines do not permit buy back of gold coins/bars by banks. In a study on India’s gold rush, industry body Assocham said the country imports most of its gold requirement, accounting for nearly a third of the global demand. Gold as a commodity on its own does not add much to the productive capacity of the economy.

Moreover, gold imports reduce the availability of foreign exchange reserves to finance the import of other commodities. Such high value of gold imports has now started hurting India’s current account position, said Assocham.

ramkumar.k@thehindu.co.in

Read more »

SBI donates bus to Lakshya Sadhana

As part of its community service banking, State Bank of India has donated a Tata winger mini-bus to Lakshya Sadhana society for the mentally challenged here. The Chief General Manager of the bank, Rakesh Sharma, while donating it, said the Hyderabad circle of the bank is lending a helping hand to the needy. Recently, a minibus and hearing aids were donated to ‘Ashray-Akruti,’ an institution taking care of the hearing impaired. In the last financial year, SBI spent Rs 4 crore under corporate social responsibility activities. The circle has 1,300 branches and this year, an amount of Rs 6 crore has been earmarked for this activity. Each branch also donated 10 fans and a water purifier to schools. The SBI is in the process of donating nearly 25 medical vans to hospitals/health centres situated in the backward districts of Andhra Pradesh under the ‘Adoption of girl child’ scheme.

Read more »